It's useful to know that Cushing is at 67,491 thousand barrels. Here. Even if we somehow had a draw of 1.6 million barrels every single month, that would only stick us back to how much oil we had in 2013. That means not one single build in the next year.

I mean, you can see from the chart - that seems unlikely because we haven't even started to take a leg down. Granted, it's only been a few months since the dollar has weakened. But the last time the dollar took a leg down we did start getting some draws. But as you can see, so far the same thing isn't happening yet. Dollar chart.

I'm guessing this is because Brazil is caved. So is Japan, and China. The U.K. is in deflation. We are barely eeking out any growth. Canada might feel a little better right now, but there really aren't any big nations that are doing very well.

2 comments:

Anonymous
said...

They raised the price of CNG last week. First time they've changed it in three years. Gas prices have been going higher at the pumps too. I'd love to see them crash again because our trucks are always rolling. If you take a step out though, we know that the US Govt can't stop spending and the easiest way to pay for it is to keep printing money. The Fed can't really raise the rates because it will cause the cost of the national debt to exceed our ability to pay, so inflation is the only politically feasible way to deal with our problems. They're talking about giving away free money to everyone to stimulate the economy. If the trend on the dollar is practically guaranteed to be lower then it seams that the value of raw materials can only go higher, even if there is weak demand for them. Investors have to put their money somewhere and when the bond market gets hosed people will abandon it for higher risk assets. DF

I agree with your outlook. Full stop. Yet I don't think the Fed has any control over the dollar right now relative to other currencies. Something close to 30% of bonds are trading negative rates right now. I think its 28% or something. That is a lot of percent.

I don't really think the gov will helicopter money because that helps people not government. And they don't really want to do that. All evidence over the last 8 years points to that.

Are there any high risk assets that aren't torched yet? I thought junk bonds were the riskiest. I don't know where these people would go to put their money. Where do you think?